Innotiimi

Jarno Poskela | 01.02.2013 | Show comments 0
LinkedIn Tweet Share on Facebook

Be aware of innovation traps (Part I)

trapHave you ever thought about innovation traps? This blog is a starting point for a series of blogs that discusses innovation traps i.e. typical obstacles and challenges that make it difficult to develop new radical innovations and hinder business renewal. Innovation traps are discussed briefly which is followed by some ideas that organization can do to overcome these traps. This first blog gives a brief background to this topic and focuses on the first trap, which I call a portfolio trap.

Strategic management must take care of the continuation of mainstream business and strategic renewal. From a business perspective, product (= goods and services) innovation is a vital factor for the firm's adaptation capabilities and strategic renewal as the environment changes. The more radical the product innovation is the more potential it has contributing strategic renewal. The development of radical innovations typically requires acquiring new competences and skills in order to succeed. Radical innovations quite often also require abandoning existing thinking models or working practices. Old structures must give room for new insights and ways of making business.

While organizations have developed efficient practices to develop more incremental innovations, these same structures and processes may inhibit development of radical innovations. Many of these "innovation traps" relate to strategic decision making and innovation process - to the topics that should be in top management's agenda. The practices that make efficient to manage linear development of strategies may inhibit adopting and making room for strategic renewal. Companies must develop similar effective processes for strategic renewal as they have for maintaining the current business before they fall in crisis.

Portfolio trap means increased incrementalism in development portfolios. New product development portfolios have turned into incremental product management portfolios where is no room for new radical ideas (see. e.g. a good analysis by Cooper (2006) on this topic). Naturally, there are several "good reasons" for this. Incremental development contains much less risks. Advantages and profits can be materialized much quicker in incremental development. Radical development may cause cannibalization of existing products. Organizations must guarantee adequate profits for the next quartile. You may continue this list with other explanations you have heard in your own organization.

There are probably as many good solutions to overcome this trap as there are explanations to continue in the incremental path. Some hints to overcome portfolio trap include:

  • The portion of radical initiatives in a company's development portfolio is a strategic decision. Make a decision and stick on that. Make separate budgets for "normal development" and "radical development" and do not let them to compete with same resources.
  • Start portfolio management. If your company has a strategic decision for radical innovations your development portfolio decisions should follow your strategy.
  • Make sure that every business unit has renewing initiatives. Many organizations have a separate unit for radical initiatives. What about turning this assumption upside down. Make business units accountable for radical development and you can have more commitment on strategic renewal.
  •   Make sure that there are radical ideas in the pipeline. If not, it is time to make serious actions to get radical initiatives. Run workshops and activate task forces to think how to utilize core competences and knowledge of company's partner networks to create something unique.

Be radical and escape your portfolio trap!

Recommended readings:

  • Cooper, R. (2006). Your NPD portfolio may be harmful to your business health. Visions Magazine.
  • Hamel, G. and Välikangas, L. (2003). The Quest for Resilience. Harvard Business Review, September, pp 52-63.
  • Poskela, J. and Martinsuo, M. (2009). Management control and strategic renewal in the front-end of innovation. The Journal of Product Innovation Management, Vol. 26, No. 6, pp 671-684.


Tags

Innovations Innovative Ideas innovative techniqu innovation, innovative, ideation, business, products, development, diversity innovation management innovation traps products portfolio Strategic management strategic renewal radical innovations several "good reasons" Portfolio trap


0 kommentarer


Please login to post a comment.